Question 1

A perpetual inventory system continually updates accounting records for inventory transactions.

Accepted Answer

A) True 
 B)False

Question 2

A company had sales of $695,000 and cost of goods sold of $278,000.Its gross profit equals:

Accepted Answer

A) $(417,000). 
B) $695,000. 
C) $278,000. 
D) $417,000. 
E) $973,000. 
A) $(417,000). 
B) $695,000. 
C) $278,000. 
D) $417,000. 
E) $973,000.

Question 3

Multiple-step income statements:

Accepted Answer

A) Are required by the FASB. 
B) Contain more detail than a simple listing of revenues and expenses. 
C) Are required for the perpetual inventory system. 
D) List cost of goods sold as an operating expense. 
E) Can only be used in perpetual inventory systems. 
A) Are required by the FASB. 
B) Contain more detail than a simple listing of revenues and expenses. 
C) Are required for the perpetual inventory system. 
D) List cost of goods sold as an operating expense. 
E) Can only be used in perpetual inventory systems.

Question 4

What is the acid-test ratio? How does it measure a company's liquidity?

Accepted Answer

The acid-test ratio is calculated by div

Question 5

What is gross margin ratio? How is it used as an indicator of profitability?

Accepted Answer

The gross margin ratio is calculated by

Question 6

J.C.Penny had net sales of $28,496 million,cost of goods sold of $19,092 million,and net income of $997 million.Its gross margin ratio equals:

Accepted Answer

A) 3.5%. 
B) 5.2%. 
C) 33%. 
D) 67%. 
E) 149.3%. 
A) 3.5%. 
B) 5.2%. 
C) 33%. 
D) 67%. 
E) 149.3%.

Question 7

A merchandising company's operating cycle begins with the sale of merchandise and ends with the collection of cash from the sale.

Accepted Answer

A) True 
 B)False

Question 8

A retailer is an intermediary that buys products from manufacturers and sells them to wholesalers.

Accepted Answer

A) True 
 B)False

Question 9

A company has the following accounts.What is the acid test ratio?

Accepted Answer

A) 4.50% 
B) 2.30% 
C) 1.75% 
D) 4.00% 
E) 1.50% 
A) 4.50% 
B) 2.30% 
C) 1.75% 
D) 4.00% 
E) 1.50%

Question 10

Distinguish between selling expenses and general and administrative expenses.

Accepted Answer

Selling expenses include the expenses of

Question 11

Merchandise inventory is reported in the long-term assets section of the balance sheet.

Accepted Answer

A) True 
 B)False

Question 12

Successful use of a just-in-time inventory system can narrow the gap between the acid-test and the current ratio.

Accepted Answer

A) True 
 B)False

Question 13

A company purchased $4,000 worth of merchandise.Transportation costs were an additional $350.The company later returned $275 worth of merchandise and paid the invoice within the 2% cash discount period.The total amount paid for this merchandise is:

Accepted Answer

A) $3,725.00. 
B) $3,925.00. 
C) $3,995.00. 
D) $4,000.50. 
E) $4,075.00. 
A) $3,725.00. 
B) $3,925.00. 
C) $3,995.00. 
D) $4,000.50. 
E) $4,075.00.

Question 14

A company had net sales of $82,000,cost of goods sold of $70,000,and other expenses of $2,000.Its gross margin ratio equals:

Accepted Answer

A) 85.37%. 
B) 2.44%. 
C) 14.63%. 
D) 16.67%. 
E) 683.33%. 
A) 85.37%. 
B) 2.44%. 
C) 14.63%. 
D) 16.67%. 
E) 683.33%.

Question 15

A company uses the perpetual inventory system and recorded the following entry:   This entry reflects a:

Accepted Answer

A) Purchase. 
B) Return. 
C) Sale. 
D) Payment of the account payable and recognition of a cash discount taken. 
E) Purchase and recognition of a cash discount taken. 
A) Purchase. 
B) Return. 
C) Sale. 
D) Payment of the account payable and recognition of a cash discount taken. 
E) Purchase and recognition of a cash discount taken.

Question 16

Burlington Company uses the perpetual inventory method.On February 12,Burlington Company purchased merchandise inventory from Huffington Inc.with an invoice price of $140,000 and credit terms of 2/10,n/30.Burlington Company paid Huffington on February 20.How would Burlington Company record this transaction?

Accepted Answer

A) Debit Accounts Payable for $140,000,credit Purchase Discounts for $2,800,and credit Cash for $137,200. 
B) Debit Accounts Payable for $140,000,credit Merchandise Inventory for $2,800,and credit Cash for $137,200. 
C) Debit Accounts Payable for $137,200,debit Purchase Discounts for $2,800,and credit Cash for $70,000. 
D) Debit Accounts Payable for $137,200 and credit Cash for $137,200. 
E) Debit Accounts Payable for $140,000 and credit Cash for $140,000. 
A) Debit Accounts Payable for $140,000,credit Purchase Discounts for $2,800,and credit Cash for $137,200. 
B) Debit Accounts Payable for $140,000,credit Merchandise Inventory for $2,800,and credit Cash for $137,200. 
C) Debit Accounts Payable for $137,200,debit Purchase Discounts for $2,800,and credit Cash for $70,000. 
D) Debit Accounts Payable for $137,200 and credit Cash for $137,200. 
E) Debit Accounts Payable for $140,000 and credit Cash for $140,000.

Question 17

In a perpetual inventory system,the merchandise inventory account must be closed at the end of the accounting period.

Accepted Answer

A) True 
 B)False

Question 18

A company purchased $7,500 worth of merchandise.Transportation costs were an additional $80.The company later returned $900 worth of merchandise and paid the invoice within the 3% cash discount period.The total amount paid for this merchandise is:

Accepted Answer

A) $6,479.60. 
B) $6,482.00. 
C) $7,275.00. 
D) $7,355.00. 
E) $6,680.00. 
A) $6,479.60. 
B) $6,482.00. 
C) $7,275.00. 
D) $7,355.00. 
E) $6,680.00.

Question 19

A company's gross profit was $83,750 and its net sales were $347,800.Its gross margin ratio equals:

Accepted Answer

A) 4.2%. 
B) 24.1%. 
C) 75.9%. 
D) $83,750. 
E) $264,050. 
A) 4.2%. 
B) 24.1%. 
C) 75.9%. 
D) $83,750. 
E) $264,050.

Question 20

___________________ refer to reductions in the selling price of merchandise sold to customers,often involving damaged or defective merchandise that a customer is willing to purchase with a decrease in the selling price.

Accepted Answer

The answer of ___________________ refer to reductions in the selling...

A perpetual inventory system continually updates accounting records for inventory transactions.

A company had sales of $695,000 and cost of goods sold of $278,000.Its gross profit equals:

Multiple-step income statements:

What is the acid-test ratio? How does it measure a company's liquidity?

What is gross margin ratio? How is it used as an indicator of profitability?

J.C.Penny had net sales of $28,496 million,cost of goods sold of $19,092 million,and net income of $997 million.Its gross margin ratio equals:

A merchandising company's operating cycle begins with the sale of merchandise and ends with the collection of cash from the sale.

A retailer is an intermediary that buys products from manufacturers and sells them to wholesalers.

A company has the following accounts.What is the acid test ratio?

Distinguish between selling expenses and general and administrative expenses.

Merchandise inventory is reported in the long-term assets section of the balance sheet.

Successful use of a just-in-time inventory system can narrow the gap between the acid-test and the current ratio.

A company purchased $4,000 worth of merchandise.Transportation costs were an additional $350.The company later returned $275 worth of merchandise and paid the invoice within the 2% cash discount period.The total amount paid for this merchandise is:

A company had net sales of $82,000,cost of goods sold of $70,000,and other expenses of $2,000.Its gross margin ratio equals:

A company uses the perpetual inventory system and recorded the following entry: This entry reflects a:

In a perpetual inventory system,the merchandise inventory account must be closed at the end of the accounting period.

A company purchased $7,500 worth of merchandise.Transportation costs were an additional $80.The company later returned $900 worth of merchandise and paid the invoice within the 3% cash discount period.The total amount paid for this merchandise is:

A company's gross profit was $83,750 and its net sales were $347,800.Its gross margin ratio equals:

___________________ refer to reductions in the selling price of merchandise sold to customers,often involving damaged or defective merchandise that a customer is willing to purchase with a decrease in the selling price.

Introducing Financial Accounting

Accounting System and Financial Statements

Adjusting Accounts for Financial Statements

Reporting and Analyzing Inventories

Reporting and Analyzing Cash and Internal Controls

Reporting and Analyzing Receivables

Reporting and Analyzing Long-Term Assets

Reporting and Analyzing Current Liabilities

Reporting and Analyzing Long-Term Liabilities

Reporting and Analyzing Equity

Reporting and Analyzing Cash Flows

Analyzing and Interpreting Financial Statements

Applying Present and Future Values

Investments and International Operations

Accounting for Partnerships

Accounting With Special Journals

Filters

Exam 4: Reporting and Analyzing Merchandising Operations

A perpetual inventory system continually updates accounting records for inventory transactions.

A company had sales of $695,000 and cost of goods sold of $278,000.Its gross profit equals:

Multiple-step income statements:

What is the acid-test ratio? How does it measure a company's liquidity?

What is gross margin ratio? How is it used as an indicator of profitability?

J.C.Penny had net sales of $28,496 million,cost of goods sold of $19,092 million,and net income of $997 million.Its gross margin ratio equals:

A merchandising company's operating cycle begins with the sale of merchandise and ends with the collection of cash from the sale.

A retailer is an intermediary that buys products from manufacturers and sells them to wholesalers.

A company has the following accounts.What is the acid test ratio?

Distinguish between selling expenses and general and administrative expenses.

Merchandise inventory is reported in the long-term assets section of the balance sheet.

Successful use of a just-in-time inventory system can narrow the gap between the acid-test and the current ratio.

A company purchased $4,000 worth of merchandise.Transportation costs were an additional $350.The company later returned $275 worth of merchandise and paid the invoice within the 2% cash discount period.The total amount paid for this merchandise is:

A company had net sales of $82,000,cost of goods sold of $70,000,and other expenses of $2,000.Its gross margin ratio equals:

A company uses the perpetual inventory system and recorded the following entry: This entry reflects a:

In a perpetual inventory system,the merchandise inventory account must be closed at the end of the accounting period.

A company purchased $7,500 worth of merchandise.Transportation costs were an additional $80.The company later returned $900 worth of merchandise and paid the invoice within the 3% cash discount period.The total amount paid for this merchandise is:

A company's gross profit was $83,750 and its net sales were $347,800.Its gross margin ratio equals:

___________________ refer to reductions in the selling price of merchandise sold to customers,often involving damaged or defective merchandise that a customer is willing to purchase with a decrease in the selling price.

Introducing Financial Accounting

Accounting System and Financial Statements

Adjusting Accounts for Financial Statements

Reporting and Analyzing Inventories

Reporting and Analyzing Cash and Internal Controls

Reporting and Analyzing Receivables

Reporting and Analyzing Long-Term Assets

Reporting and Analyzing Current Liabilities

Reporting and Analyzing Long-Term Liabilities

Reporting and Analyzing Equity

Reporting and Analyzing Cash Flows

Analyzing and Interpreting Financial Statements

Applying Present and Future Values

Investments and International Operations

Accounting for Partnerships

Accounting With Special Journals

Filters